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October 2018 | Peter Wilke, Multi-Asset Portfolio Manager, Brian Doherty, Investment Director, Multi-Asset Product Management, Matthew Bullock, Investment Director, Multi-Asset Product Management

The sweet spot of multi-asset income

Single-asset income strategies worked well in the past, but are they still viable in the current environment? Members of our multi-asset team consider how investors can generate income without putting their capital at substantial risk.

Multi-asset approach

  • Dynamic: We adopt a dynamic approach to asset allocation, selecting investments as and when opportunities arise.
  • Diversified: We combine market-directional and market-neutral investment ideas to achieve improved structural diversification.
  • Income: We believe income should derive from the natural yield of the portfolio; it shouldn’t rely on having to access capital to meet an income target.

INCOME INVESTORS HAVE FACED MANY CHALLENGES SINCE THE FINAN­CIAL CRISIS.

Clients are concerned about what could happen to their capital in a rising-rate environment, the lower credit quality of riskier assets and, perhaps most importantly, mitigating downside in volatile mar­kets so as to avoid a repeat of 2008.

We believe it is still possible to generate sustainable income while seek­ing to minimise the potential for capital erosion. However, this may require approaches you might not typically associate with multi-asset income investing.

Our approach to generating sustainable income is a three-part multi-asset strategy we call Dynamic Diversified Income (DDI). DDI seeks a stable income with a secondary focus on generating capital growth over time. It is based on three core pillars: dynamism, diversification and income.

To read the full report, please click the download link below.

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